Business Directories

CRISIS: Egypt to seek urgent IMF talks

Cairo, February 21, 2013

Egypt plans to invite an IMF mission to Cairo within a week, the government said on Thursday, signalling an imminent resumption of negotiations over a $4.8 billion loan as it struggles with an acute foreign currency shortage.

Planning Minister Ashraf al-Araby said foreign investment in Egypt had all but dried up and announced grim economic data, exposing the depth of the country's financial crisis before elections expected in the spring.

Analysts had expected the government of President Mohamed Mursi to try to delay a deal with the International Monetary Fund until after the elections, as the loan's terms will demand highly unpopular austerity measures. Parliamentary polls are expected to begin in April or May.

However, Araby said he expected rapid movement. "God willing, we expect to invite the IMF delegation within days," he told a news conference. Asked to be more specific, he said: "Within days, no more than a week."

Cairo reached an initial agreement with the IMF on the loan in November but postponed final ratification in December because of political unrest. This followed Mursi's move to push through a controversial new constitution completed by his backers in the Muslim Brotherhood and other Islamist parties.

Araby announced that foreign investment in Egypt was almost non-existent in the six months to the end of December, reflecting the political and economic uncertainty besetting the Arab world's most populous nation.

He added that Egypt needed strong investment to reach seven percent annual economic growth - the rate economists believe is needed to lower unemployment and soak up the waves of young Egyptians entering the labour market.

However, he said growth had been just 2.2 percent year-on-year in the three months to the end of December.

Egypt's pound has tumbled 8 percent against the dollar this year as its international reserves fell to $13.6 billion, less than the $15 billion needed to cover just three months' worth of imports. - Reuters